2018 has been a good year for me, both financially and career-wise.
On the career front, the new company I joined in late 2017 treats me well and the team is pretty awesome. The work I do there have been meaningful and fulfilling. The monthly income derived from this work is more than sufficient for my monthly expenses and save a decent amount of money for retirement.
On the personal finance side of things, being a disciplined saver paid off for the year. After completing the purchase of my overseas property in Cambodia, I channeled the same amount that I used to save for the property into my investments through Autowealth's robo-advisor platform and started building my diversified investment portfolio of international ETFs.
Achieving a net savings rate of 63.32%
Compared to last year's net savings rate of 59.84%, this year's net savings rate grew to 63.32%. It's an improvement, but still lower than the net savings rate in 2015 and 2016.
But to be fair, most of my monthly net savings rates are hovering above 70% except December as I splurged on a 2-week backpacking trip in Eastern Europe.
Examining expenses incurred in 2018
When I track my expenses, I would typically split them into 3 broad categories - necessary expenses, discretionary expenses and excess expenses.
Necessary expenses consist of spendings on 'needs' on food, transportation, insurance, etc. while discretionary expenses comprises of expenses on 'wants' like travel, entertainment, shopping, etc. I maintain a category called excess expenses to document seasonal and celebratory expenses during Chinese New Year, weddings, etc.
In 2018, necessary expenses accounted for close to 40% while discretionary expenses took a big slice of the pie at 54.8% and excess expenses only accounts for 5.3%.
Almost half of my discretionary expenses (47%) was spent on shopping. There's definitely a lot of fats to trim on that in 2019.
My annual expenses for 2018 ended at $37,042.12 which was higher than expected having taken 3 overseas holiday and making one too many purchases this year.
Onward and upward with net worth
After my net worth became positive in Oct 2016, it continues to to grow year on year, just falling short of my target by a little due to the bear market for the past few months.
For those interested, my net worth consists of all my assets including my CPF accounts but I chose to exclude the value of my HDB flat since it's for own stay. However, I chose to include my mortgage loan as part of my liabilities.
My plans for 2019
I'm not a big fan of new year resolutions. Instead, I prefer to look through the past year to see what's working and whats not.
For the things that are working for me, I believe in putting in effort and discipline to maintain and improve on these things. As for bad habits and activities that aren't helping me, I want to allocate time to change them.
Then I would think about mid to long term goals that I want to achieve and insert some incremental milestones into 2019 that will help me reach these goals in the long run.
Here are 2 mid to long term milestones that I'm tweaking my 2019 budget planning in to achieve.
- Accumulate the Full Retirement Sum amount in my CPF Special Account with cash top ups by the age of 41 to let it compound and accumulate till age 55.
- Work to 43 to accumulate sufficient money in my CPF Ordinary account to be able to compound interests yearly to service the remaining monthly mortgage payments for my HDB flat.
Goal 1: Increase my health and fitness activities
I have not been cycling as much in 2018 compared to the past few years so I intend to get back on my road bike and cycle more often. My target is to achieve a total of 3,000 kilometres in 2019.
Goal 2: Remain focused on lifelong learning
My lifelong learning goal in 2018 was to learn about Data Science. To study Data Science, I signed up for a 12-month subscription on Datacamp.com with the objective of completing the 22 courses in their Data Scientist Track.
Sadly, I've only completed 17 out of the 22 courses so I will have to catch up and complete the remaining 5 courses in early 2019. Once that is done, I plan to complement my Data Science knowledge by upgrading my coding skills to build better websites and mobile applications for the rest of 2019.
Goal 3: Continue to work on my net savings rate
I ended 2018 with a 63.32% net savings rate. In 2019, I will strive for a 70% net savings rate by reducing some of the discretionary expenses like shopping.
Goal 4: Stay invested throughout the bear market
While some of the folks in the personal finance community choose to hold more cash and start investing when the stock market starts to show signs of recovery.
I'm no investment guru and that's why you don't see any stock picking recommendation in my blog. Neither will I be able to predict when the stock market will recover.
Therefore, I choose to stay invested in this bear market and continue to make dollar-cost averaging investments monthly through Autowealth, my preferred robo advisor in 2019 while the stock market continues to fluctuate.
Goal 5: Top up CPF Special Account for next 5 years
To achieve the first key milestone of accumulating Full Retirement Sum in my CPF Special Account by the age of 41, I intend to make monthly cash top ups of $995 each month for the next 5 years.
Based on my calculations, this should be able to help me achieve this milestone in 5 years' time.
What are your plans for 2019?
Benjamin Franklin supposedly once said, “If you fail to plan, you are planning to fail.” Sir Winston Churchill is credited with another saying: “Those who fail to learn from the past are doomed to repeat it.”
What changes do you intend to make in 2019 to improve your personal finances?
I'd love to hear about your plans. Please share them in the comments section below.